Saturday, Aug 27, 2016

Dubai: Traders on Dubai Gold and Commodities Exchange (DGCX) are making maximum use of volatility caused by Brexit, oil prices and other factors.

With trading available in 44 products, which includes currency pairs, precious metals and crude oil and other contracts, the exchange has managed to register a jump of 45 per cent in year to date volumes at 12.41 million contracts as against 8.58 million contracts. In value terms, the bourse registered volumes of $1.7 billion (Dh6.2 billion) per day compared with $1.5 billion last year, unmatched compared to other exchanges in the country.

“As the volatility keeps on increasing, it is giving us more and more customers. Most of the customers are financial investors, the exchange has end users as clients, which uses the exchange for hedging and price risk management,” Gaurang Desai, chief executive officer at DGCX told Gulf News.

Among the 11 pairs of currencies that the bourse trades in, the Indian rupee witnessed growth of 42 per cent in daily volumes to be at 68,159 lots. Volumes in gold products jumped up 65 per cent on year to date basis compared to the same period last year. The exchange registered volumes of 3 tonnes compared to 1.8 tonnes in the same period last year.

“We have seen good traction there post Brexit, while the euro, which recorded high volumes before Brexit, but now the pound has taken the lead in volumes. while a large number of the customers are financial investors, the exchange has seen growth in end users as clients, who use the exchange for hedging and price risk management,” Desai said.

“Traditionally the exchange has been strong on Indian rupees [INR], so INR is doing pretty well. This year focus has been on gold, energy sector, equities and currencies other than Indian rupee,” he added.

The UK pound witnessed volumes of about 502 lots per day this year against 200 lots last year, while the average daily value for the euro jumped to 600 lots compared to 438 lots last year.

“Our idea has been to diversify away from the Indian rupee, and we have been focusing in educating people in these products, so they are yielding some results in some form or shape. WTI, gold, GBP have done well,” Desai said.

Expansion

Going forward, the bourse is planning to expand its product line, “so there is something for everyone”.

“The exchange is planning to reactivate Brent contracts and also start trading in spreads between the WTI and Brent, which has been popular. We will fortify in terms of verticals. We have been looking at agro products. We are definitely adding more products in the current verticals,” Desai said.

“We are trying to add new global members. We have been trying to add capacities, connectivity with various markets like India, Singapore and other trading centres. We hope to get more business out of that,” he added.

With the launch of more products, and adding new members, the bourse plans to double its volumes.

“Our target is to double the volumes in the near term. We would launch more products, more members, better regulations to achieve this target. We need a lot more international participation than what we currently have,” Desai said. DGCX has a total of more than 250 members currently.

“With commercial banks being pressured by increased demand on their balance sheets — they would look for centrally cleared platforms, clearing-house of DGCX to move some of their bilateral trades,” he said, adding that factor would also enhance the appeal of the exchange.

By Siddesh Suresh Mayenkar Senior Reporter

Gulf News 2016. All rights reserved.